Recently, I took a deeper look into cryptocurrency and discovered why now is the time to invest. Have you ever heard someone say, "I wish I would have invested in Apple stock when it first came out" or "I wish I would have kept my stock in Apple for just a little while longer"? Yeah, I have too. Interested, I began to look deeper into cryptocurrency.
What is Cryptocurrency?
Apple stock was originally $22 when it first came out. Bitcoin was worth 6 cents. If you had invested $20 at this time, when bitcoin got up to $17,000 your investment would have been worth ~$28 million. But what is cryptocurrency?
Cryptocurrency is decentralized money. More specifically, according to investopedia "A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation."
Pros and Cons
Here are some initial pros and cons I see:
Pros
- You can invest as little as you want. Unlike the stock market where to buy one share you have to pay the full market price, you can buy a piece of the coin. That means if you have $20, you can buy $20 worth of a bitcoin or any other coin.
- Opportunity for a large, quick return. Most investments take years to see a major return on investment (ROI). The high volatility of crypto can cause major upside very quickly.
- Quick transactions. Some cryptocurrencies, like Ripple, take minutes to transfer significant amounts of money from one person to another as to days it can take some banks.
Cons
- The market is extremely volatile. One day bitcoin is worth 17k, the next it is 10k. It is a high risk high reward game.
- Opportunity to lose money quickly. You can get several short term gains, but you can also take some short term major hits, so invest wisely before jumping in too deep!
- Security. As long as you are on secure trading platforms you should be fine, but hackers still have the ability to try to hack your coins if they are not in a secure place. Consider getting a cold storage wallet.
How Can I Invest?
You can start investing in cryptocurrency right now. Coinbase allows you to buy the five main cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. There are also sites like Gdax (works with Coinbase) and Binance and a plethora of others that allow you to trade. All of these platforms take a transaction fee while making your crypto purchases. However, the platform, Robinhood (which also gives you one free stock when you create an account), is allowing it's users to buy Bitcoin and Ethereum sometime this month or early March with no transaction fee in select states.
How Can I Learn More?
To keep up with the latest crypto stocks, you should check out coinmarketcap.com. This website allows you to watch the market, but also allows you to conduct research on each of the coins (websites are usually attached). You can also see how the coins have been doing historically by looking at the graphs provided. You can also keep up with news on ccn.com and or listen to this podcast.
Next Steps
Want to take your investments to the next level? This is a guide on how to purchase alt-coins. If you have any more questions about cryptocurrency, feel free to contact me!
Yahoo’s strategy turned out to be completely backwards.